Amazon hits high in wake of ratings upgrade

SAN FRANCISCO (MarketWatch) — Amazon.com Inc. started the week on a strong note Monday, with the online retailer’s stock reaching a high and getting praise in the form of a ratings upgrade from Morgan Stanley.

Reuters

Amazon CEO Jeff Bezos

Before the start of trading, analyst Scott Devitt raised his rating on Amazon
AMZN, -0.11%
to overweight from equal weight and set one of Wall Street’s highest price targets on the stock, with a goal of $325 a share.

Following Devitt’s upgrade, Amazon shares rose more than 4% to a high of $269.22 a share. The company’s stock price has risen more than 47% over the past year.

In a research note, Devitt cited Amazon’s order fulfillment network as one of the keys that will drive the company’s growth over the next decade, calling it “an underappreciated, strategic asset.” Devitt also cited Amazon’s position in developing markets, such as China, as an avenue of opportunity for the world’s largest online retailer.

“When considering the countries where Amazon does have [order] fulfillment assets, it is important to note that there is not a single other company in the world that operates in all of the same regions,” Devitt said. “This may lead to sustainable barriers to any other global entrant.”

Devitt said Amazon’s current spending on operations in China “is proving to be a significant drag on international profitability.” However, Amazon is expected to keep investing in the country, as it currently ranks fourth in the country in terms of gross merchandise volume of online retailers behind Asian-based companies Tmall, 360buy and Suning.

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